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Chapter 16 Leases

Rental units come in all shapes and sizes; from single-family homes to multistory high-rises that contain hundreds of units. This block of historic apartment buildings is another type of rental property. Chapter 16 Leases. 16 Leases. Learning objectives

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Chapter 16 Leases

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  1. Rental units come in all shapes and sizes; from single-family homes to multistory high-rises that contain hundreds of units. This block of historic apartment buildings is another type of rental property. Chapter 16Leases

  2. 16 Leases • Learning objectives • Identify the four types of leasehold estates • Describe the requirements and general conditions of a valid lease, and how a lease may be discharged • Explain the rights of landlords and tenants in an eviction proceeding, and the effect of pro-tenant legislation and civil rights laws on the landlord-tenant relationship • Distinguish the various types of leases

  3. 16 Leases • Leasehold estates • Estate for years • Estate from period to period (periodic tenancy) • Estate at Will • Estate at Sufferance

  4. 16 Leases

  5. 16 Leases • Requirements of a valid lease • Offer and acceptance • Consideration • Capacity to contract • Legal objectives

  6. 16 Leases • Lease agreements • Possession of premises • Use of premises • Term of lease • Security deposit • Improvements • Maintenance

  7. 16 Leases • Lease agreements • Destruction of premises • Assignment and subleasing • Recording a lease • Nondisturbance clause • Options

  8. 16 Leases • Types of leases • Gross lease • Net lease • Percentage lease • Variable lease • Ground lease • Oil and gas lease • Lease purchase • Sale and leaseback

  9. 16 Leases • Discharge of leases • Breach • Suit for possession: actual eviction • Tenants’ remedies: constructive eviction • Pro-tenant legislation

  10. 16 Leases • Fair Housing and Civil Rights Laws • Affect landlords and tenants • Cannot discriminate against protected classes

  11. A property manager is also a “people manager” and relationships are important. This manager may be checking a property’s plans for adequate fire planning, for upgrading the HVAC system, or for a remodeling project. Chapter 17Property Management

  12. 17 Property Management • Learning objectives • Identify the basic elements of a management agreement • Describe a property manager’s functions • Explain the role of environmental regulations and the Americans with Disabilities Act in the property manager’s job • Distinguish the various types of insurance alternatives

  13. 17 Property Management • Elements of a management agreement • Description of the property • Time period • Definition of the manager’s responsibilities • Statement of the owner’s purpose • Extent of the manager’s authority

  14. 17 Property Management • Elements of a management agreement • Reporting requirements • Compensation • Allocation of costs • Antitrust provisions • Equal opportunity statement

  15. 17 Property Management • Manager’s responsibilities • Financial reports • Renting the property • Marketing • Selecting tenants • Collecting rents • Maintaining good tenant relations

  16. 17 Property Management • Manager’s responsibilities • Maintaining the property • Preventive • Repair or corrective • Routine • Construction • Tenant improvements

  17. 17 Property Management • Federal laws affecting property management • ECOA • Fair Housing Act • Americans with Disabilities Act (ADA)

  18. 17 Property Management Provide doors with automatic opening mechanisms Provide menus (and real estate listings) in a large-print or Braille format Install an intercom so customers can contact a second-floor business in a building without an elevator Lower public telephones Add grab bars to public restroom stalls Permit guide dogs to accompany customers Provide a shopper’s assistant to help disabled customers Provide ramps in addition to entry stairs

  19. 17 Property Management • Risk management • Risk management techniques • Tenant security

  20. 17 Property Management • Risk management • Insurance • Fire and hazard • Flood • Consequential loss, use, and occupancy • Contents and personal property • Liability • Casualty • Surety bonds • Handling environmental concerns

  21. Measurement is vital to the appraiser. Not just physical measurement in feet and inches, but measurement of value and cost. Chapter 18Real Estate Appraisal

  22. 18 Real Estate Appraisal • Learning objectives • Identify the different types and basic principles of value • Describe the three basic valuation approaches used by appraisers • Explain the steps in the appraisal process • Distinguish the four methods of determining reproduction or replacement cost

  23. 18 Real Estate Appraisal • Appraising • Regulation of appraisal activities • Competitive market analysis • Broker’s price opinion

  24. 18 Real Estate Appraisal • Appraisal process 1. State the problem 2. List the data needed 3. Gather, record, verify, and analyze data • General data • Specific data • Data for each approach 4. Determine the highest and best use 5. Estimate the land value 6. Estimate value by each of the three approaches 7. Reconcile the estimated values 8. Report the final value estimate

  25. 18 Real Estate Appraisal • Value • Market value • Market value versus market price • Market value versus cost

  26. 18 Real Estate Appraisal • Basic principles of value • Anticipation • Change • Competition • Conformity • Contribution • Highest and best use

  27. 18 Real Estate Appraisal • Basic principles of value • Increasing and diminishing returns • Plottage • Regression and progression • Substitution • Supply and demand

  28. 18 Real Estate Appraisal • Sales comparison approach to value • Subject property versus comparable properties • Property rights • Financing concessions • Market conditions • Conditions of sale • Market conditions since date of sale • Location • Physical features and amenities

  29. 18 Real Estate Appraisal • Cost approach to value • Reproduction cost versus replacement cost new • Square-foot method • Unit-in-place method • Quantity-survey method • Index method • Depreciation • Physical deterioration • Functional obsolescence • External obsolescence

  30. 18 Real Estate Appraisal • Income approach to value • Annual potential income • Effective gross income • Annual operating expenses • Capitalization rate • Gross rent multiplier (GRM) • Gross income multiplier (GIM)

  31. 18 Real Estate Appraisal • Reconciliation • Not taking an average of the three estimates of value • Certain approaches are more valid and reliable with some types of properties • Different weight given to each approach

  32. Issues controlled by local land-use controls include how close developers can place units to each other and how to protect historic characteristics of an area. Chapter 19Land-Use Controls and Property Development

  33. 19 Land-Use Controls and Property Development • Learning objectives • Identify the various types of public and private land-use controls • Describe how a comprehensive plan influences local real estate development • Explain the various issues involved in subdivision • Distinguish the function and characteristics of building codes and zoning ordinances

  34. 19 Land-Use Controls and Property Development • The comprehensive plan • Land use • Housing needs • Movement of people and goods • Community facilities and utilities • Energy conservation

  35. 19 Land-Use Controls and Property Development • Zoning ordinances • Buffer zones • Bulk zoning • Aesthetic zoning • Incentive zoning • 14th Amendment and Takings Clause (5th Amendment) • Taking • Inverse condemnation

  36. 19 Land-Use Controls and Property Development • Zoning permits • Zoning hearing board • Nonconforming use • Conditional use • Variance

  37. 19 Land-Use Controls and Property Development • Subdivision • Subdivider versus developer • Land planning • Plat • Subdivision plan • Density

  38. 19 Land-Use Controls and Property Development • Subdivision • Private land-use controls • Restrictive covenants • May be more restrictive than zoning ordinances • Regulation of land sales • Interstate Land Sales Full Disclosure Act • State subdivided land sales laws

  39. Fair housing is not just “nice to have”—it’s the law. Fair housing practices are established by local, state, and national laws and regulations, and the judicial system actively enforces them. Chapter 20Fair Housing and Ethical Practices

  40. 20 Fair Housing and Ethical Practices • Learning objectives • Identify the classes of people who are protected against discrimination in housing by various federal laws • Describe how the Fair Housing Act is enforced • List the exemptions allowed in the Fair Housing Act

  41. 20 Fair Housing and Ethical Practices • Learning objectives • Explain how fair housing laws address a variety of discriminatory practices and regulate real estate advertising • Distinguish the protections offered by the Fair Housing Act, the Housing and Community Development Act, the Fair Housing Amendments Act, the Equal Credit Opportunity Act, and the Americans with Disabilities Act

  42. 20 Fair Housing and Ethical Practices • Equal opportunity in housing • Civil Rights Act of 1866 • Fair Housing Act • HUD • “Housing” • “Familial status” • “Disability” • Prohibited actions • Exemptions

  43. 20 Fair Housing and Ethical Practices • Equal opportunity • Jones v. Mayer • Equal Credit Opportunity Act • Americans with Disabilities Act

  44. 20 Fair Housing and Ethical Practices • Fair housing issues • Blockbusting • Steering • Advertising • Appraising • Redlining • Intent and effect • Response to concerns of terrorism

  45. 20 Fair Housing and Ethical Practices • Enforcement of the Fair Housing Act • Complaints initiate investigation by HUD • Conciliation • Administrative proceedings • Penalties • Civil action in federal court

  46. 20 Fair Housing and Ethical Practices • Professional ethics • Standards for integrity and competence in dealing with consumers • Code of conduct for relations among industry professionals • Code of Ethics

  47. Pollution, such as hazardous runoff into local waterways, is a serious issue for homeowners, developers, and real estate professionals. Chapter 21Environmental Issues and the Real Estate Transaction

  48. 21 Environmental Issues and the Real Estate Transaction • Learning objectives • Identify the basic environmental hazards an agent should be aware of in order to protect the client’s interests • Describe the warning signs, characteristics, causes and solutions for the various environmental hazards most commonly found in real estate transactions • Explain the fundamental liability issues arising under environmental protection laws • Distinguish lead-based paint issues from other environmental issues

  49. 21 Environmental Issues and the Real Estate Transaction • Hazardous substances • Asbestos • Lead-based paint and other lead hazards • Radon • Formaldehyde • Carbon Monoxide • Polychlorinated Biphenyls (PCBs) • Chlorofluorocarbons (CFCs) • Mold • Electromagnetic fields

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